Higher Ranking Public School Districts Add Value to Residential Real Estate

Trulia recently analyzed data from the 2010 census, comparing the ratio of families with children ages 5-9 versus families with children ages 0-4. Not surprisingly, families with school aged children tended to favor traditional suburbs. What may be a bit more of a surprise is how the supreme importance of educational opportunities trumped other factors in the house buying process, like price, commute time and attractive community amenities. With the housing recession our country has grappled with, communities with high ranking public school districts weathered the storm quite a bit better than their neighboring cities. Homes within higher ranked school districts, like Mercer Island, tended to hold their value better than homes located within lower ranked neighboring districts.

Furthermore, Location Inc.’s analysis of 6 months of data from RealtyTrac Inc., during 2011, demonstrated the percentage of home foreclosures went down as school district ranking rose. The data collected affirmed that homes within the boundaries of higher ranked districts “maintained higher home-sale prices, and higher home prices per square foot.” This news isn’t terribly surprising to savvy real estate agents. Educational opportunities within school districts have been a long-time leading force for home buying decisions. It’s thought-provoking to keep in mind the time period when this data was analyzed by Location Inc. The mortgage rates were higher, and home prices were statistically lower, than they have been during Summer & Fall 2012.

Zillow’s CEO Stan Humphries surmised that higher ranking school districts and lower foreclosure rates are not tied to each other, but rather are tied to income. Homeowners with higher incomes weathered the real estate crash better because their housing witnessed less price erosion. In turn, the school districts within wealthier communities benefited by more stable income provided by the sustained property taxes. The opinion of Location Inc.’s Andrew Schiller differed – he saw school district performance as both “a result and driver of income concentrations in parts of metropolitan areas.” School districts who establish themselves as offering higher quality educational opportunities in turn bring a larger demand for homes within the district boundaries, and thus the homes retain higher values even in economic downturns.

The city of Mercer Island is in a unique situation. The city offers small community living within minutes of large city convenience, which is attractive to a variety of home owners. It is interesting to note that although 70% of the households on the island do not have children living with them, the Mercer Island School District is ranked #1 in the state by Neighborhood Scout, the real estate website affiliated with data sifter extraordinaire Location Inc.

Maintaining a high quality school district is a longstanding community pillar, even as the number of households containing children hovers at 30%. Mercer Island Schools Foundation initiates fund raising campaigns like the annual phone-a-thon and Breakfast of Champions— and they met their giving goals despite economic conditions in recent years. The island business community supports the school district through a variety of programs. Elementary school art education has been funded through the grassroots Art Bus nonprofit. Plus, a variety of private K-8 schools and high schools are located on Mercer island. Parents have the choice of private education opportunities and the city’s  public education system, both of which are of the highest caliber.

So what does this all mean for home owning residents of Mercer Island— both with and without children living in their households? They are benefiting from the high caliber educational opportunities Mercer Island School District provides to its students. They maintain a higher value for their home in both good and less vibrant markets. With fewer foreclosures in Mercer Island, home pricing isn’t driven down as much due to lower priced foreclosures being available.

Some island families will opt to send their children to one of the four private schools on Mercer Island. However, at today’s tuition rates, the cost for sending 1 child to one of these private schools, for the grade years of education available at the school, is between $60,000 and $160,000. In a community where parents have the option of choosing between outstanding public schools or outstanding private schools, their children will receive a terrific education. AND the odds are that the financial investment in a home will be a solid one for years to come is especially relevant, according to these recent studies, to those who own homes within the boundaries of a highly ranked public school district, like Mercer Island’s.